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Sharp decline in US 10-year bond yields prompted hedge funds to return to the gold market

The latest data from the Commodity Futures Trading Commission showed that the sharp decline in the yield on 10-year US bonds prompted some hedge funds and money managers to return to the gold market.

However, renewed speculative bullish interest was not enough to push prices above $ 1,800 an ounce.

While most market analysts remain optimistic about gold over the long term, some believe the precious metal will not continue to rise due to rising inflation.

The CFTC Traders Commitment Report for the week ending April 20 showed that financial managers increased their speculative long positions on Comex gold futures by 4,773 contracts to 116,843 contracts. At the same time, short positions increased by 2,156 contracts to 60,419 contracts.

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Gold’s net length currently stands at $ 56,424, which is virtually unchanged from the previous week. During the study period, gold prices rose to a two-month high, approaching $ 1,800 an ounce.

Analysts at TD Securities said they are also monitoring the $ 1,800 per ounce level. Adding that, in their opinion, the breakout of this level is only a matter of time, but it will not happen without volatility.

Eugen Weinberg, head of commodity research at Commerzbank, said that in the near future, gold has the potential to rise above $ 1,800 an ounce, and he is relatively neutral on the price until at least the fourth quarter of 2021. Adding that investors will continue to view gold as an important long-term inflation hedge, the improving economic data will continue to support the current economic recovery and could provide additional boost to US bond yields and the US dollar.

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Weinberg said he is also watching stock markets to determine gold’s next move. He explained that if the stock markets continue to sell off, then investors can turn to the precious metal as a safe-haven asset.

While hedge funds remain cautious in the gold market, they remain optimistic about silver.

The detailed report showed that speculative money-managed long positions on the Comex in silver futures rose 6,069 contracts to 61,979 contracts. At the same time, short positions increased by only 649 contracts, to 27,992 contracts.

Silver’s net length is currently 33,987 contracts, up nearly 19% from the previous week.

During the reporting period, silver prices managed to exceed $ 26 per ounce. Silver is still superior to gold.

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Many analysts are more bullish on silver than gold. Some analysts expect the improving economy and the growing transformation of green energy to provide important support to industrial demand for silver.

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